Federal Push May Restrict Welfare Checks

South Dakota is one of a handful of states that sends a check each month directly to welfare recipients, meaning the state has no control over how recipients spend those dollars.

That's a departure from how many states administer their programs, known as Temporary Assistance for Needy Families. Most states issue TANF benefits through Electronic Benefit Transfer cards, a system that allows the government to directly transfer benefits onto a card that can be used for food stamps, TANF, child support and other benefits.

The electronic cards work like debit cards, allowing recipients to use them at ATMs. They also enable state governments to restrict where the cards may be used. Many states choose not to enact restrictions, but others do.

Now it's possible the federal government will require all states, including South Dakota, to restrict where TANF benefits can be spent. Sen. Max Baucus, D-Mont., and Sen. Orrin Hatch, R-Utah, have introduced a bill that would require states to ensure that benefits aren't accessed in casinos, liquor stores or strip clubs. The legislation comes after a host of media investigations throughout the nation found that benefits were withdrawn at ATMs in those locations as well as at tattoo parlors and other questionable locations.

TANF was born out of the 1996 overhaul of welfare. The program earmarks block grants to states, and states have latitude to develop their own rules. But in general, TANF is meant to build self-sufficiency among recipients. They are required to work, be in school or in qualified work-training programs. In South Dakota, recipients must work a minimum of 30 hours a week in an allowable activity, or 20 hours for recipients with children younger than 6.

$395 a month in S.D.

There's also a limit - generally 60 months - to how long a person can be on the program. The benefit is small. In April, the average family TANF payment in South Dakota was $395.23. There were 6,642 recipients in the program in April.

States that issue benefits with EBT cards may restrict where benefits can be used, though many don't. Federal legislation would require them to do so, or the state would be penalized.

Washington state has worked with tribal casinos to ensure EBT cards don't work in ATMs in casinos, said Rebecca Henrie, the assistant director of the community services division of the state's Department of Social and Health Services. The department also has shut down point-of-sale purchases at state-owned liquor stores.

New Mexico also limits EBT card use at casinos, said Betina Gonzales McCracken, spokeswoman for the Human Services Department. Texas prohibits their use in businesses that derive 10 percent or more of their revenue from alcohol or entertainment, said Stephanie Goodman, spokeswoman for the Health and Human Services Commission.

No limits

But other states have been reluctant to limit where TANF benefits can be accessed. In Nevada, for example, casinos are part of the culture, said Miki Allard, the TANF staff specialist for the Division of Welfare and Supportive Services. Many beneficiaries work in casinos or live near them, so limiting their use in casino ATMs would penalize them, she said.

Nevada expressly says that TANF benefits can be used for "recreation," Allard said.

"I would be hard pressed to find something that we could say, 'No, that isn't recreation,' " she said.

New Hampshire also has no restrictions. It would take too much effort to determine who owns ATMs in casinos and then block their use, said Terry Smith, director for the Division of Family Assistance. Even if the state did block access at casinos, a person could go to an ATM, get cash, and go back to the casino, he said.

"It's a lot of work for absolutely zero benefit," Smith said.

That's a common sentiment among skeptics of restricting TANF benefits. States already are trying to administer programs in an era of diminishing resources, said Elizabeth Lower-Basch, a senior policy analyst at the Center for Law and Social Policy, an advocacy group for low-income people. Making them police TANF benefits would be another expense.

Benefits might be withdrawn at casino or liquor store ATMs, but that does not mean the money is being spent in those establishments, she said.

"I think people sometimes jump to conclusions when they see those numbers," she said.

She predicted political resistance to establishing federal regulations.

"I'm not sure this is going anywhere on the federal level," she said. "It may have more legs at the state level."

It's almost certain to have legs in South Dakota. In this year's legislative session, lawmakers proposed drug testing for welfare recipients. The effort failed, in part because of costs.

There are reasons why a few states, such as South Dakota, issue checks. Wyoming also issues checks rather than using an EBT system, said Tony Lewis, director of the Department of Family Services. It's cheaper than the cost of an EBT vendor agreement. Wyoming bars the use of TANF funds for alcohol, but in practice it's unenforceable.

South Dakota uses an EBT card for food stamps and other benefits, but not TANF. The state Department of Social Services was contacted several times but did not respond to answer questions for this story.

Rep. Melissa Magstadt, R-Watertown, said she and other lawmakers were surprised to learn the benefits don't have strings.